Winnipeg city council approves $21.5M deal to end police HQ lawsuits

Winnipeg city council has approved a deal to settle fraud and deficiencies lawsuits against dozens of people and companies involved in the procurement and construction of Winnipeg police headquarters on Graham Avenue.

Council voted 14-2 on Thursday to cease legal action against police-headquarters contractor Caspian Construction, its owner, Armik Babakhanians, and dozens of other defendants in exchange for a payment of no less than $21.5 million.

The settlement does not include former Winnipeg chief administrative officer Phil Sheegl and several other defendants in a legal action that was severed from the city’s original lawsuit. 

A court ruled last year that Sheegl accepted a $327,200 bribe from Babakhanians. Sheegl asked the Manitoba Court of Appeal to overturn that ruling, and a decision is expected later this year.

Couns. Russ Wyatt (Transcona) and Matt Allard (St. Boniface) voted against the settlement.

Wyatt says he wants to see a written copy of the legal terms between the city and the defendants, but the city’s legal staff would not comply. The councillor did not attend the first of two council seminars about the settlement and walked out of the second one within minutes because he said his assistant was not permitted to remain in the meeting.

Wyatt also tried to persuade his colleagues to send the settlement to another set of lawyers for review, but his motion was defeated 13-3.

According to a report authored by city solicitor Harold Dick, the settlement calls for the city to recoup $21.5 million if the money is paid within a year of council approval. The settlement would rise to $22.5 million if the cash is received within two years and $23.5 million if the payment is made within three years.

If full payment is not made within three years, the city would receive $28 million.

Council approved a Wyatt amendment to require city staff to report back about the status of the repayment.

Settlement follows 4-year legal action 

The police headquarters opened in 2016 after the city spent $214 million buying Canada Post’s former office tower and warehouse complex on Graham Avenue and converted it into a new home for the Winnipeg Police Service.

City council originally approved the project in 2009 at a total cost of $135 million for both the purchase and construction. The construction component alone ballooned to $137.1 million by 2011 and then eventually to $156.4 million, not including additional work outside the scope of the core contract, now described by the city as “soft costs.” 

The construction component of the project was the subject of a city-commissioned external audit in 2014 and a five-year RCMP investigation that concluded in 2019 without any charges.

The city then launched a civil action against dozens of people and companies, initially for deficiencies in the building and later for fraud related to the project. The case against former CAO Sheegl was then severed from the suits against other defendants.

New inquiry push fails in hung vote

Council also did not pass a Wyatt motion to renew a 2017 council request for the province to call a public inquiry into the police headquarters construction project and real-estate transactions examined by a city audit in 2014.

That audit examined five transactions in detail:

Wyatt also wanted the inquiry to look at the expansion of RBC Convention Centre.

On the floor of council, Wyatt called his renewed push for an inquiry “an apple-pie motion” and asked “who doesn’t like apple pie?”

Council voted in 2017 to ask the province to call an inquiry and former mayor Brian Bowman made repeated calls for an inquiry following that vote. Former premier Brian Pallister and current Premier Heather Stefanson rejected those overtures.

Wyatt questioned why that happened, and asked whether Pallister was and Stefanson is protecting someone.

“We need to send a message again to Broadway that we need public inquiry now. The premier should have called it by now,” Wyatt said during a break in the council meeting. 

“The fact that premier hasn’t called one by now sends the citizens of Manitoba the impression that we’re living in a banana republic.”

CBC News has reached out to the premier to respond to Wyatt’s comment.

Bowman said last week the city still needs an inquiry after a settlement.

Gillingham said he still supports council’s 2017 call for an inquiry even though he voted against Wyatt’s motion, which he called too broad.

Wyatt’s motion ended in a tie vote, with eight councillors for and eight against. Votes at council require a majority to pass.